It's easy to break Linux. Just go rm -rf / as root and it will happily self-destruct.
Configuration files are generally stored as 'plain text' ascii files. System-wide configuration files are generally stored in the /etc/ directory. This direction is about the closest equivelent to the windows registry that your going to find. If you edit those files you can protect yoursellf from any mistakes by making copies of those files before you edit them. Then if you do it wrong, you just copy the files back over.
It would take a lot of effort to get to the point were you 'ruin' the OS by editing configuration files. If you edit lilo.conf wrong and then run lilo you can render the system unbootable, but then you can come in with a rescue disk, use chroot (if you know how) and fix it manually. If your using grub you can mess up the grub.conf or something like that, but then you'd have to manually enter the right boot command at start up instead of selecting from a list of boot commands, or use a rescue disk.
Generally what happens is a degragation of functionality. Edit a config wrong and you'd loose your web server or if you edit fstab wrong you could loose the ability to mount a cdrom or whatnot. Most of the time it's easily fixable, especially if you make backups of the files before you edit them.
Users are not allowed to access anything outside their home directories. So their configs (refered to as user preferences) are stored in .filename and .directoryname files and directories. These are dynamicly created, usually, when you start up a program. The dot before the name makes the name hidden.
Many of these you can manually edit, but it's usually easier to use the configuration tools provided by the various apps. Gnome and KDE have a sort of 'registry' that they use for storing their configs. Gnome has it based around a hidden directory of xml-formatted text files that hold that information. Generally you don't want to edit those.
As a user it's pretty easy to find a bug or have a config file that gets messed up. For instance you could select a screwed up theme in gnome and make the text the same color as the background or something like that.
So often you can simply delete these hidden files, but often they store things like you bookmarks or email in them so it may be smarter to copy them somewere safe before removing them.
To get your user back to a clean slate you can do something like this:
cd ~
mkdir backup.configs
cp -r .??* backup.configs/
The .??* means that all the files beginning with . that have 2 or more other characters in it's name gets moved to backup.config directory. Each ? represents one wildcard that requires a character being present. Otherwise you may accidently remove or move the . or .. files that represent the current directory and parent directory.
(go "cd ." and "cd .." to see what happens)
then logout. Sometimes you have to kill the gconf2 configuration monitoring deamon and clean out /tmp directory, but that's what you do. If you want to get them back to the original condition copy them back to your home directory. You can also selectively go thru them and copy them back to their original place.
All of this works best while your not in X, of course, and if you know how to operate from a command line it makes Linux much more powerfull to use.